Microsoft Broadens IP Indemnity

Microsoft has broadened its IP indemnification to cover most of its customers, not just the big ones. The official announcement is here. Groklaw has posted a deconstruction of the text of the indemnification. Much of the textual analysis on Groklaw is IMHO inaccurate. Looks to me like Microsoft is giving a real indemnity.

However, is it truly a valuable thing that Microsoft is providing a full indemnity? First of all, few software companies, in my experience, can avoid giving a full IP indemnity to customers, so maybe the response is "welcome to the club, Microsoft."

Second, and more importantly, consider the answers to the following questions. Has Microsoft ever been sued for patent infringement related to technology in one of its products? (Hint: Yes, a number of times.) At the time of such patent infringement claim, did Microsoft have a contract that fully indemnified the users? (Hint: No) Has anyone sued a Microsoft end user for patent infringement over a technology that Microsoft put in its products? (Hint: I don't think so)

This points out a fact of software business life: a commercial software developer normally needs to fix a patent infringement claim for one of its products for business reasons regardless whether an indemnity if given to customers or not. Regardless whether an indemnity is provided, Microsoft has to fix its patent problems.

The giving of the indemnity is therefore, in my opinion, not giving much if anything away by Microsoft. A marketing ploy? Possibly.

However, the fact that there is a company that views it in its best interest to defend patent infringement claims is potentially a real distinguishing feature between MS Windows and Linux.

My two cents. Your comments welcome.

posted by Paul Arne @ 11:52 AM